CanadianAI: Two unicorns in a week, and Ottawa finally starts writing the rules
And more on Cohere's new coding model, an AI worm out of U of T, and 1Password buys its way into AI agents.
Good morning! Welcome to the Canadian AI Newsletter, a weekly rundown for founders, operators and investors.
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I am Raif Barbaros, Partner at Mistral Venture Partners. Views are my own.
Two themes this week: money and rules. On the money side, two new Canadian unicorns in the same seven days, both with AI as the centrepiece of their pitch, Toronto’s Beacon at a $1.4B valuation and Montréal’s nesto at $1.47B, with a Calgary-rooted manufacturing-vision raise and a tidy Toronto fintech pre-seed alongside. On the rules side, Ottawa tabled the first Canadian legislation to regulate AI head-on: one bill that puts safety duties directly on chatbot operators, another that gives you the right to make a company delete an AI deepfake of you. Add a sobering warning from a Toronto lab about what open-weight models can do in the wrong hands, and a rare look inside the GTA building where one of Canada’s most powerful supercomputers actually lives. Let’s get into it.
💰 Deals & Milestones
Beacon (Toronto) closed a US$225M Series C that values the AI rollup at roughly $1.4B.
General Catalyst and HarbourVest led, with Lightspeed and Toronto’s Intrepid Growth Partners. The round is all-equity and all-primary, pushing total funding past US$550M and lifting the valuation from the $1B it carried on its US$250M Series B last November. The deal actually closed in January and was only made public this week.
Beacon is the “anti-private-equity” play: launched in 2024 by former Instacart president Nilam Ganenthiran, it buys small, established software companies and rebuilds them on a shared AI operating stack. It is reportedly closing roughly one acquisition a week.
AI rollups are a real opportunity, and Beacon is running the Constellation Software playbook with an AI engine bolted on. The thesis is that legacy software businesses are full of margin you can unlock with automation.
I met Nilam years ago when we negotiated the deal with Loblaw that brought Instacart to Canada. He is a super smart, all-around good human. He’s pulling in another ex-Instacart superstar, Marc Schaff, previously CTO at Instacart - getting the band back together!
nesto (Montréal) raised a CAD $302M Series E at a CAD $1.47B valuation.
The round splits into $107M primary and $195M secondary, with La Caisse, Fidelity Canada, PICTON and Endeavor Catalyst coming in new, alongside returning backers Portage, Diagram, NAventures, National Bank, Fonds de solidarité FTQ and Fondaction. The company is profitable, with more than $37B in originations this year and over $80B under administration.
Will invest in AI to improve employee productivity and client experience.
Also launches its Maestro AI platform, which nesto says can underwrite a mortgage deal in under two minutes, work that has historically taken a day or more.
The secondary-heavy structure tells you early backers are taking real money off the table, which is a healthy sign for the Canadian fintech cap-table ecosystem.
Maneva (Toronto) raised a US$27M Series A to put computer vision on the factory floor.
US Venture Partners led, with USVP’s Matt Garratt joining the board, and returning investors Bling Capital and Freestyle Capital plus Canadian firms Seguin Ventures and N49P. Total raised is now US$38.4M. CEO Rae Jeong is a former DeepMind engineer who started out as a welder in Alberta; CTO Kelvin Chan is a Magna alum.
The product turns a plant’s existing cameras into a real-time system that flags defects, catches safety hazards, and tracks output. Worth a candid flag: it also monitors workers, and Maneva’s own materials pitch up to a 10% productivity lift. That is a workforce-surveillance story as much as a quality-control one, and someone will write about it that way.
I’d gotten a demo of Maneva’s tech a while back, and they were already in the future. They’re continuing the trend with this impressive financing round.
DataBraid (Toronto) secured a US$1.9M pre-seed to kill insurance brokers’ “portal hopping.”
The round, which is the company’s first and closed in April, came entirely from Koru Ventures, the venture studio backed by the Ontario Teachers’ Pension Plan. Founder and CEO Nick Romano previously ran Montréal’s Deeplite, the neural-network-optimization startup acquired by STMicroelectronics last year; co-founder and CTO Atif Khan joined from Messagepoint. They built and piloted the product with Welland, Ontario’s Scoop Insurance.
DataBraid’s software plugs into broker management systems and propagates data across the fragmented mess of carrier portals brokers juggle, eliminating the manual re-entry.
Databiomes (Toronto) launched Ctrlvox, its first AI model, for on-device moderation of toxic game chat. (Disclosure: Databiomes is a Mistral Venture Partners portfolio company.)
Ctrlvox is a customizable model that runs on players’ existing CPUs with no GPU or cloud inference, now live as an Unreal Engine plug-in on Epic Games’ Fab marketplace. Databiomes says it outperforms Alibaba’s Qwen3Guard, and that the model cost $60 and took seven hours to build on its own nano-language-model platform. Co-founded by Steven Gans (ex-AMD, Intel, IBM) and CTO Tomasz Klempka; $1.2M CAD raised to date.
Disclosure: I led their pre-seed round. Databiomes’ tech is truly a magical unlock of LLMs. Build your own custom nano LLM for tens of dollars and deploy it on cheap CPUs and NPUs. I’m obviously a big fan and so happy to see them start opening their platform to different verticals.
🏢 Large Companies
Cohere (Toronto) open-sourced North Mini Code, its first agentic coding model. (Disclosure: Cohere is a Mistral Venture Partners portfolio company.)
A 30B-total, 3B-active mixture-of-experts model, open weights under Apache 2.0, small enough to run on a single H100, which Nick Frosst demoed on a Mac Studio. Independent testing by Artificial Analysis ranked it among the fastest open-weight models for output speed and ahead of comparable small models in coding.
Scotiabank (Toronto) expanded Scotia Intelligence, its enterprise AI program, into a new phase.
The bank now says it has enabled more than 71,000 employees with assistive AI tools and has 5,500 engineers using AI for coding, with AI use up 30% quarter over quarter. This is an extension of the platform that was first stood up last year, not a new launch.
🔬 Research
The Vector Institute (Toronto) signed a research MOU with Germany’s Helmholtz Munich.
The agreement formalizes joint AI and machine-learning research, researcher exchanges, faculty affiliations, and coordinated Canada-Germany funding, with health AI as the early focus. Vector’s Shaina Raza had already presented at Helmholtz Munich’s HAICON 2026 workshop on June 8 on AI benchmarking.
AI ties to Europe continue.
University of Toronto and Vector researchers demonstrated an AI-powered “worm” that can target any online device.
Led by U of T’s Nicolas Papernot, a Canada CIFAR AI Chair at Vector, the team showed that free, open-weight models can power a self-adapting worm that changes its attack strategy as it moves from device to device, hijacking each machine’s compute and exploiting its specific weaknesses. The work was built and tested in a secure, internet-isolated lab, and the team flagged it deliberately, to get ahead of the threat.
🏛️ Policy
Bill C-34, the Safe Social Media Act, would create a Digital Safety Act and is among the first Canadian statutes to put safety duties squarely on AI chatbot operators.
Per Osler’s read, operators of “chatbot services” would owe a duty to act responsibly: emergency measures that interrupt and redirect a user who expresses suicidal ideation, a ban on the bot posing as a human or as a licensed professional, limits on “manipulative engagement techniques” designed to foster unhealthy attachment, and synthetic-content labelling. Penalties run up to the greater of $20M or 5% of gross global revenue.
If you are building anything conversational, a companion app, a support agent, a coaching product, read this bill now, not after it passes. The companion-AI and “manipulative engagement” provisions are pointed directly at the engagement-maximizing design patterns that a lot of consumer AI quietly relies on.
Bill C-36, the Protecting Privacy and Consumer Data Act, would replace the 28-year-old PIPEDA and reach AI deepfakes directly.
Would enshrine privacy as a fundamental right, set a higher bar for children’s data, restrict surveillance pricing, and create a right to deletion that explicitly extends to having AI deepfake images or videos of you removed from commercial platforms. It would also require companies to be transparent about their use of AI, and shift private-sector privacy authority to the new Digital Safety Commission, with fines up to the greater of C$25M or 5% of global revenue.
Paired with C-34, this is the post-strategy legislative engine finally turning over. Note what is not here: the old AIDA-style horizontal AI regulation from the failed Bill C-27 is not revived, and Ottawa says dedicated AI rules will travel separately. So the sequencing is privacy and online-harms first, broad AI law later. For founders, the deepfake-deletion right and the AI-transparency duty are the provisions with teeth today.
Manitoba rejected a hyperscale AI data centre south of Winnipeg.
Premier Wab Kinew said a proposed 141-hectare, gas-turbine-powered facility near Île des Chênes, backed by Las Vegas-based Jet.AI and Vancouver’s Consensus Core, will not proceed. (Reported June 4, just before our window, included for the thread.)
This is fine, and arguably healthy. If a jurisdiction does not want a data centre, it should not have one, and there will be other places that do. There are many proposals across Canada, many of which will get built. Despite all the demand for data centres, we should resist provincial or municipal subsidies to make the math work. Let the market do its thing. The bigger question beneath it is whether the industry is building compute ahead of demand, as it overbuilt railroads in the 1800s and fibre-optic networks in the 90s. If that is what is happening here, the right posture is to let private capital carry that risk, not to backstop it with taxpayers’ money.
📰 In brief
1Password (Toronto) acquired Apono and launched a Credential Broker, extending its identity platform to govern what humans, machines and AI agents can access, when, and for how long.
DRIVE Hockey (Vancouver) landed a $100K NRC IRAP grant for Coach AI, which turns sensor and “Smart Arena” data into NHL-calibre coaching insights for amateur players.
Inside Trillium. BetaKit got a rare look inside the GTA building that houses Trillium, the University of Toronto-owned, SciNet-operated supercomputer (close to $200M in hardware, roughly 142nd in the world) that researchers use to simulate oceans and model stars. A neat, rare insider look at one of the most powerful machines in the country, sitting quietly in Toronto. Worth the read, and a useful grounding for the sovereign-compute debate that keeps running through these pages.
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— Raif